Retailers eye bigger slice of Vietnam pie

The domestic retail sector expects to increase its contribution to the
Gross Domestic Product (GDP) from the current 14 percent to 23 percent
in 2014.

Chairwoman Dinh Thi My Loan of the Vietnam
Retailers Association (VRA) said the sector has several advantages that
make the target achievable.

She explained that the sector still has "big room" for both foreign and domestic investors to develop their business.

The country's population has climbed up to 90 million, a majority of
which was young people who use up to 70 percent of their income for
shopping.

Given this shopping tendency as well as
the statistics that every 100,000 people needed a big trade centre,
every 10,000 require a supermarket and every 1,000 people one or two
convenience stores, Loan said.

However, even big
cities in Vietnam including Ho Chi Minh City and Hanoi do not have
enough retail establishments to meet these standards, she noted.

In rural areas, which are home to 70 percent of the country's
population, retail distribution systems are not well developed and do
not meet local demand, she said.

According to statistics compiled by VRA, the country now has 717 modern retail centres and 8,600 traditional markets.

Vietnam's modern retail ratio still is rather low at 22 percent,
compared with other countries in the region including the Philippines
with 30 percent, Thailand with 46 percent, China with 51 percent and
Malaysia with 60 percent.

"To grasp this market's available potential, more and more enterprises want to invest in the retail sector," Loan said.

"In the first nine months of the year, 11,000 enterprises have resumed
business after temporarily stopping due to the economic downturn. Up to
30 percent of these are involved in the retail sector," she said.

Competitiveness

Fully foreign-owned retailers number just 21, but they still dominate
the domestic retail market thanks to their professional management
skills and efficient distribution system, as well as abundant sources of
commodities.

"Domestic retailers have some
weaknesses including limited professional skills, insufficient sources,
unprofessional distribution systems and prices that are not
competitive."

To sharpen their competitive edge, domestic retailers should fully exploit the advantages they have, she said.

For instance, they should make optimal use of the long-term, close
relationship between them and consumers to expand their market share.

Domestic producers should also improve the quality of
their products as well as their packaging to make them more attractive
to the customers.

Loan also stressed the need for
retailers to increase human resource quality. "A retail enterprise can
develop only when they have staffs who can not only sell commodities
directly but also take good care of customers. Good managers are also
very important to help the enterprises outline effective development
strategies," Loan said.

Many senior economists
agreed with Loan saying that domestic retail enterprises would find it
difficult to compete with the foreigners if they did not improve
themselves.

This is an urgent task of great
importance given that more and more famous foreign retailers from around
the world were looking to enter the Vietnamese retail market.

Domestic retailers should also join hands with each other to multiply
their strength and thus increase their competitiveness, the experts
said.-VNA